"We’ve lost some of our customer relevance," CEO Don Thompson said yesterday.

Sales for the fourth quarter were disappointing because new menu items like the McWrap and Mighty Wings failed to resonate. Executives also stressed that customers are strapped for cash and unwilling to splurge beyond the essentials.

McDonald's has a 3-step plan for getting customers back in restaurants:

Improve the menu. McDonald's menu has become "overcomplicated," Chief Operating Officer Tim Fenton said. Rather than focusing on releasing new items like Fish McBites, steak breakfast sandwiches, and Mighty Wings, McDonald's will begin to focus more on getting its core basics right. There will also be an emphasis on value and the Dollar Menu and More.

Modernize the customer experience. McDonald's is currently working to renovate its restaurants to appear more modern. The new, inviting atmosphere is meant to evoke popular fast-casual chains like Panera Bread. McDonald's is also testing a new mobile app that is meant to attract younger customers.

Making breakfast better. McDonald's is emphasizing coffee and other breakfast beverages like smoothies, which do very well with customers, Fenton said. The brand is also changing the way breakfast items are prepared in order to be more efficient, especially during peak times.